By Amina Nazarli
Azerbaijan’s cooperation with the International Monetary Fund (IMF) was discussed during Baku visit of Jihad Azour, the director of the Middle East and Central Asia Department of the IMF.
In Baku, Azour was first received by President Ilham Aliyev, who praised the long-term cooperation between Azerbaijan and the IMF.
President Aliyev hailed the importance of reforms in the public administration system in Azerbaijan , and noted the significance of purposeful measures to facilitate and further improve business environment and encourage investment making.
The head of state highlighted modernization of the education system and work done to increase the educated and skilled staff potential in Azerbaijan, as well as reforms in the country's banking sector.
Describing 2017 as the year of financial stability, President Aliyev pointed out that efficient measures are being taken to ensure economic growth in 2018.
Azour, for his part, noted that the IMF laudes the reforms carried out in Azerbaijan under the leadership of President Aliyev. He emphasized the importance of steps taken by the government towards eliminating the impact of the global economic crisis on Azerbaijan's economy and stabilizing the macroeconomic situation due to sharp decline in oil prices.
The IMF official also hailed the importance of the strengthening of the manat and continuation of the budget consolidation process as well as structural reforms in the country's economy. Azour also noted the importance of diversifying the economy, developing the non-oil sector and preparing the country's economy for the post-oil era.
Although Azour’s first visit to Azerbaijan was of familiarization character, he came to Baku with forecasts.
The IMF expects Azerbaijan’s gross domestic product to decline 1 percent in 2017, then grow 2 percent next year, Azour told a news conference on September 13.
The IMF also expects double-digit inflation in the oil-producing country in 2017. “This forecast is preliminary and may be adjusted by the end of 2017,” Azour added.
He added that the IMF mission would visit Azerbaijan in early December to discuss forecasts for the country’s 2018 state budget and the results of implementation of economic reforms.
Azour said Azerbaijani officials did not express an interest in IMF loans. “IMF has no plans to resume lending to Azerbaijan in the near future as the Azerbaijani government has not requested this,” he said.
The IMF official noted that after the fall in oil prices, the Azerbaijani government did a lot of work for economic recovery. “Major reforms were implemented, and the economy began to recover. The situation is gradually returning to normal, monetary stability was achieved. Inflation is still at a two-digit level and it should be reduced to a single-digit level,” he added.
“Very good steps have been taken so far,” Azour said. “It is necessary to further continue these steps.”
As for banking sector, Azour stressed that Azerbaijan should continue the restructuring of the field since the country's economic recovery depends on this.
The process of restructuring the banking sector in Azerbaijan started in January 2016. As a result, licenses of 11 banks were revoked. The process of IBA restructuring was completed on September 1. Moreover, 2017 saw the merger of two banks – AtaBank and Caspian Development Bank.
“We discussed the issue of restructuring of the International Bank of Azerbaijan (IBA) and the banking sector as a whole, as part of meetings with the finance minister, as well as the leadership of the Financial Market Supervisory Authority and the Central Bank. We believe that the government of Azerbaijan has taken serious steps to resolve the issue of problem banks,” Azour said.
“The restructuring of the banking sector will have a positive impact on its sustainability, enhance credibility of the financial and banking sector, and reduce budget risks. Simultaneously, it is necessary to support banking activities,” he added.
Azerbaijan joined the IMF in 1992 with opening its office in the capital.
In 1995-2005, the Fund allocated loans worth $577.3 million to Azerbaijan. Azerbaijan fully repaid the loans. There has been no need of Azerbaijan to apply to the IMF for financial resources since 2005. Therefore, since 2006, the IMF is cooperating with Azerbaijan in two areas - consultations on economic policy and technical assistance to some state agencies.
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